U.S. added just 29,000 jobs in September, with unemployment rate rising to 4.2%

The U.S. labor market showed unexpected softness in September, with the Bureau of Labor Statistics reporting a gain of 29,000 nonfarm payroll jobs — well under the 90,000 jobs economists had forecast. The unemployment rate climbed to 4.2%, up from 4.1% in August and above consensus expectations. The report also included downward revisions to prior months: August’s increase was trimmed from 162,000 to 133,000, and July’s previously reported 21,000 gain was revised to a 10,000 jobs loss.

Wage measures in the report were also weaker than expected. Average hourly earnings rose 0.1% month-over-month in September, below forecasts for 0.3% and down from August’s 0.3% pace. On a year-over-year basis, average hourly earnings increased 3.0%, under the 3.2% estimate and slightly below August’s 3.1%.

Financial markets reacted quickly to the data. The 10-year Treasury yield fell about 7 basis points to 5.17%, while the 2-year yield also dropped to roughly 4.71%. U.S. equity futures were firmer, with the Nasdaq up around 1.2% in the minutes after the release. Gold rose more than 1% and the dollar declined against major currencies.

Cryptocurrency markets saw bitcoin maintain gains following the labor data; the token was trading just under $87,000 — around $86,600 — and was up a bit more than 2% over the prior 24 hours. The overall market reaction reflected investors reassessing the outlook for interest rates in light of a softer-than-expected jobs report.